Official Payments Holdings, Inc. (Nasdaq: OPAY), a leading provider of electronic payment solutions for the biller direct market, today released results for the quarter ended June 30, 2012.

Results of Operations

Third Quarter Fiscal 2012 Results

For the quarter ended June 30, 2012, Official Payments reported revenues from Continuing Operations of $39.2 million, a 1.9% increase over the same quarter last year. Our loss from Continuing Operations was $0.9 million, or $0.05 per fully diluted share, as compared with a loss of $0.08 per fully diluted share from the same quarter last year. Continuing Operations include Payment Solutions, and our VSA operations, which we are winding down. On a standalone basis, our Payment Solutions business reported quarterly revenues of $38.9 million, or a 2.1% increase over the same quarter last year.

Our general, administrative, selling and marketing expenses, which support our Continuing Operations, were $9.2 million, an increase of $2.0 million, or 28%, from the same quarter last year. Approximately $1.5 million of this increase was due to management incentive plan accruals in the third quarter 2012 versus reversals of the incentive plan accrual in the same period in 2011.

Management’s Comments

Alex P. Hart, President and Chief Executive Officer of Official Payments Holdings, Inc. stated, “We’ve produced three quarters in a row of positive improvement over the prior year and I’m pleased with how we’re positioned. I believe our strategy is sound and that we’re executing well.”

Definition and Reconciliation

We use the following non-GAAP financial measures in this press release: Adjusted EBITDA from Continuing Operations and Payment Solutions net revenue. Official Payments’ management believes these measures are useful for evaluating our performance against the performance of peer companies within the electronic payments industry, and that these measures provide investors with additional transparency with respect to financial measures used by management in its financial and operational decision-making. Our management believes that Payment Solutions net revenue provides additional information about our business, as we wind-down our VSA operations. We also use Adjusted EBITDA from Continuing Operations, together with other criteria, in our executive compensation program. Non-GAAP financial measures should not be considered a substitute for the reported results prepared in accordance with generally accepted accounting principles in the United States, or US GAAP. Our definitions used to calculate non-GAAP financial measures may differ from those used by other companies.

Official Payments defines Adjusted EBITDA from Continuing Operations as net loss from our Continuing Operations before interest expense net of interest income, income taxes, depreciation and amortization, restructuring charges and stock-based compensation in both equity and cash.

The following table shows a reconciliation of net loss from Continuing Operations to Adjusted EBITDA from Continuing Operations for the three and nine months ended June 30, 2012 and 2011:

Adjusted EBITDA

Three months ended June 30,

(in thousands)

2012

2011

Change

Net Loss from Continuing Operations

$

(852

)

$

(1,356

)

$

504

Adjustments:

Depreciation/Amortization

1,851

1,856

(5

)

Stock-based compensation

371

324

47

Restructuring charge

2

—

2

Taxes

5

46

(41

)

Less:

Interest (expense) income, net

(1

)

19

(20

)

Adjusted EBITDA from Continuing Operations

$

1,378

$

851

$

527

Adjusted EBITDA

Nine months ended June 30,

(in thousands)

2012

2011

Change

Net Loss from Continuing Operations

$

(3,894

)

$

(3,825

)

$

(69

)

Adjustments:

Depreciation/Amortization

5,620

5,420

200

Stock-based compensation

1,352

(522

)

1,874

Restructuring charge

1,493

—

1,493

Taxes

5

(139

)

144

Less:

Interest income, net

—

76

(76

)

Adjusted EBITDA from Continuing Operations

$

4,576

$

858

$

3,718

Official Payments defines Payment Solutions net revenue as Payment Solutions gross revenue less discount fees. Discount fees include interchange fees and other processing-related dues, assessments and fees. Payment Solutions gross revenue is defined as revenue from continuing operations less revenue from VSA operations. The following is a reconciliation of Payment Solutions net revenue to revenue from continuing operations for the three and nine months ended June 30, 2012 and 2011:

Net Revenue

Three months ended June 30,

(in thousands, except percentages)

2012

2011

Change ($)

Change (%)

Revenue from continuing operations

$

39,163

$

38,443

$

720

1.9

%

Less:

VSA revenue

257

353

(96

)

(27.2

)%

Payment Solutions gross revenue

38,906

38,090

816

2.1

%

Less:

Discount fees

27,134

29,170

(2,036

)

(7.0

)%

Payment Solutions net revenue

$

11,772

$

8,920

$

2,852

32.0

%

Net Revenue

Nine months ended June 30,

(in thousands, except percentages)

2012

2011

Change ($)

Change (%)

Revenue from continuing operations

$

106,820

$

101,679

$

5,141

5.1

%

Less:

VSA revenue

1,142

1,208

(66

)

(5.5

)%

Payment Solutions gross revenue

105,678

100,471

5,207

5.2

%

Less:

Discount fees

70,415

74,462

(4,047

)

(5.4

)%

Payment Solutions net revenue

$

35,263

$

26,009

$

9,254

35.6

%

Liquidity

As of June 30, 2012, we had $40.8 million in cash and cash equivalents. Our $40.8 million in cash, cash equivalents and marketable securities includes $6.9 million of accrued discount fees and funds of $1.1 million we have not yet paid to clients due to the timing of bank transactions. These items reduce our cash available for our use. Therefore, the cash and cash equivalents available to us at June 30, 2012 are $32.8 million. Using the same calculation, we had $32.7 million available to us at September 30, 2011.

Conference Call

Official Payments will host a conference call Tuesday, August 7 at 5:00 p.m. Eastern Time to discuss these results. To access the conference call, please dial (877) 917-3616. The conference call will also be broadcast live via the Internet at www.OPAY.OfficialPayments.com.

A replay will be available at 8:00 p.m. Eastern Time on Tuesday, August 7, 2012 at www.OPAY.OfficialPayments.com or by calling (800) 925-4415. The replay will be available from 10:00 p.m. Eastern Time, Tuesday August 7, 2012 until 11:59 p.m. Eastern Time on August 28, 2012.

About Official Payments Holdings, Inc.

Official Payments Holdings, Inc. (Nasdaq: OPAY) is a leading provider of electronic payment solutions in the biller direct market. Headquartered in Norcross, Georgia, the company provides enhanced electronic payment services that include multiple payment choices, payment channels, and bill payment products and services to more than 3,500 clients in all 50 states and the District of Columbia. Official Payments serves clients in multiple markets including federal, state, and local governments, educational institutions, and utilities. Consumers may pay federal taxes, state and local taxes, property taxes, and other bills such as utilities and college tuition with credit cards, debit cards, electronic checks and alternative payment methods via online, telephone, point of sale and other channels by visiting www.OfficialPayments.com. Corporate information is available at www.OPAY.OfficialPayments.com.

Forward looking statements

Statements made in this press release that are not historical facts are forward-looking statements that are made pursuant to the safe harbor provisions of the Private Securities Litigation Reform Act of 1995. These forward-looking statements relate to future events or Official Payments’ future financial and/or operating performance and generally can be identified as such because the context of the statement includes words such as “may,” “will,” “intends,” “plans,” “believes,” “anticipates,” “expects,” “estimates,” “shows,” “predicts,” “potential,” “continue,” or “opportunity,” the negative of these words or words of similar import. Official Payments undertakes no obligation to update any such forward-looking statements. Each of these statements is made as of the date hereof based only on current information and expectations that are inherently subject to change and involve a number of risks and uncertainties. Actual events or results may differ materially from those projected in any of such statements due to various factors, including, but not limited to: general economic conditions, which affect Official Payments’ financial results in all our markets, which we refer to as “vertical markets”, particularly the federal vertical market, the state and local tax vertical market and the property tax vertical market; effectiveness and performance of our systems, payment processing platforms and operational infrastructure; our ability to grow Payment Solutions revenue while reducing our costs, including processor and interchange related costs; the timing, initiation, completion, renewal, extension or early termination of client or partner contracts or projects; our ability to execute on our sales and product strategy and realize revenues from our business development opportunities; the impact of regulatory requirements; and unanticipated claims as a result of project performance, including due to the failure of software providers, processors, vendors, partners, or subcontractors to satisfactorily perform and complete engagements. For a discussion of these and other factors which may cause our actual events or results to differ from those projected, please refer to the periodic reports on Form 10-K and Form 10-Q that we file with the Securities and Exchange Commission.